Finance Minister Nirmala Sitharaman warned the public on Sunday about the risks of following financial influencers on social media platforms, saying that many of them are driven by ulterior motives or promote fraudulent schemes.
Speaking at an event in Bengaluru, Ms Sitharaman said that while there are some genuine experts who offer sound advice on investing and saving, there are also many who mislead people or lure them into dubious apps that promise high returns but are actually Ponzi schemes.
"I have no proposal to regulate them at this stage," she said. "But yes, a word of caution is important. If there are three or four people giving us good advice, there are seven out of 10 who are probably driven by some other considerations."
"There are also apps which are coming out saying that your money will fetch you this much. Many of them are Ponzi. We should double-check. We have to be careful," she said.
She added that the government is working with the Ministry of Electronics and Information Technology (MEITY) and the Reserve Bank of India (RBI) to clamp down on such apps and protect the hard-earned money of the citizens.
The comments come amid a debate over the need for regulation and consumer protection in India's booming stock market, given the rise of financial influencers on social media.
India has seen a surge in retail participation in the stock market since the onset of the COVID-19 pandemic, as low-interest rates and lockdowns prompted people to look for alternative sources of income.
But many of these investors lack financial literacy and experience, making them vulnerable to manipulation and misinformation.
Several Telegram channels and YouTube accounts have come under scrutiny in recent months for offering paid stock tips and recommendations without proper disclosures or disclaimers.
Some of them were also involved in pump-and-dump schemes, where they artificially inflate the prices of certain stocks and then sell them at a profit, leaving their followers with losses.
The Securities and Exchange Board of India, the country's capital market regulator, has been trying to curb such malpractices and educate investors about the risks involved.
It recently issued a public notice urging investors not to rely on unverified sources of information and to report any suspicious activities to its helpline.
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